dbcde convergence review background paper final
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8/7/2019 DBCDE Convergence Review Background Paper Final
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Comments and inquiries
You can contact the Convergence Review secretariat by email:
convergence@dbcde.gov.au
or by post:
Convergence Review Secretariat
Department of Broadband, Communications and the Digital Economy
GPO Box 2154
CANBERRA ACT 2601
#converg: Those that have a Twitter account are invited to join the
conversation using the #converg hashtag to share information and updates
related to convergence.
Copyright
© Copyright 2010 DBCDE
This is an updated version of the background paper that was released on
14 December 2010.
Unless otherwise noted in the excluded and rights reserved
list below, the material in this Convergence Background Paper
is licensed under a Creative Commons Attribution –3.0
Australia licence.
More information on this CC BY license is set out at
http://creativecommons.org/licenses/by/3.0/au/ and below.
Except where otherwise noted the following terms apply.
Attribution: Any use of all or part of the general content must include the
following attribution: © DBCDE Convergence Background Paper
For any reuse or distribution, you must make clear to others the licence terms.
The best way to do this is to link or refer to the CC BY licence outlined above.
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All rights in the materials listed below are reserved.
Materials excluded and rights reserved
Commonwealth Coat of Arms and Department of Broadband,
Communications and the Digital Economy logo
All tables and images (including any text included, or embodied, in the
image).
If you have inquiries regarding the licence, any use of this document outside
the scope of the license or any use of the images in a way that is notpermitted by the Copyright Act 1968 , you should send an email
convergence@dbcde.gov.au or a letter to the Convergence Review Secretariat
to the address noted above.
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Message from the Minister
In the 1990s, when Australia’s key pieces of communications
legislation—the Broadcasting Services Act 1992 and the
Telecommunications Act 1997 —were enacted, few could foresee
the massive changes ahead in the way people use and interact
with the media.
The legislation still in place today was formed at a time when
viewers watched analog broadcast television in their lounge rooms
at the end of the day, and used the internet primarily for emails and looking
for text-based information via nascent search engines. Since that time,
Australians have moved from placing most of our phone calls from fixed
landline telephones to making an increasing number of calls on mobiles.
Today, you can use your phone to surf the internet while at the gym, or
watch a program that was on TV last night on your smartphone while you are
on the bus.
This phenomenon is known as convergence, and its impact is being felt right
across society. All over the world, as audiences increasingly take control of
their media and communications use, traditional business models are being
forced to adapt quickly to the new realities of the digital era.
The rollout of the National Broadband Network and the switch to digital-only
television will ensure that Australia is well-placed to take advantage of these
technological innovations.
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The NBN will transform the delivery of content in Australia, allowing viewers
to access virtually limitless content from all over the world. Already IPTV is
taking off in Australia; the ABC’s iView service allows you to download
programs directly to your TV screen; Foxtel and IPTV companies such as Fetch
provide on-demand services, allowing viewers to pick and choose from a vast
library of content titles—like having your own DVD store online. When the
NBN is completed, the download speeds available on the fibre network will
make watching any content on-demand service over the internet
indistinguishable to the viewer from watching broadcast TV.
As Australia forges ahead to embrace the digital economy, however, we need
to consider whether our regulatory system is equipped to keep pace. The
legislative and regulatory settings governing our media and communications
industries are designed to foster competition, to encourage diversity of
opinion, to protect original Australian voices and to guard consumer and
citizens’ rights. It is timely for us to contemplate whether these settings will
continue to achieve these outcomes amidst the structural changes that are
occurring in technology and industry.
The implications for Australian content and culture are enormous. When
audiences can watch, listen to or read content from anywhere at any time,
then the role of the media in forming and nurturing our national identity will
have to adapt. The need for shared experience will remain, but it is incumbent
on us to get the settings right to ensure Australian stories are there to be
shared.
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There is a broad consensus on the need for a comprehensive review of
Australia’s media and communications regulations. The government stated its
intention to look further at the impacts of convergence in both the NBN:
Regulatory Reform for 21st Century Broadband discussion paper (April 2009)
and Australia’s Digital Economy: Future Directions Report (July 2009). Now, as
we move ahead to take full advantage of the digital economy, is the
appropriate time to do this.
Media and communications industries affect the lives of every Australian, and
the Convergence Review will have important outcomes for our society. The
regulations under examination affect the news you consume, the TV you
watch, the radio you listen to and the content you enjoy online.
I ask all interested Australians to contribute ideas, comments or suggestions
to assist the review—it is crucial that all voices are heard in this important
conversation about our future as a nation.
Stephen Conroy
Minister for Broadband, Communications and the Digital Economy
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Background Paper
The purpose of this paper is to provide context and background to the
government’s Convergence Review, which is examining Australia’s
communications legislation in light of emerging technology and industry
trends. This paper is not intended as an exhaustive account of all the issues.
Rather, it is designed to equip readers with an introduction to these issues
and for use as an aid when considering the discussion papers and providing a
submission to the Review Committee.
Specifically, this short paper provides an explanation of what convergence
means, an outline of the key drivers, the trends and issues arising from it and
how these developments are reflected in the Terms of Reference.
What is convergence and why do we need a review?
Convergence, in its usual sense, means coming together. In the world of
communications technology, it is the major communications platforms
(broadcasting, telecommunications and online) that are coming together so
that their once separate functions now overlap. Video content, for example,
that used to be available only on television can be viewed easily over the
internet.
A person can now watch exactly the same TV program on a TV set, laptop, or
mobile phone. However, the underlying networks that are used to transmit
the program are very different—broadcast spectrum or cable networks, the
internet or mobile networks.
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Australia's key communications legislative framework was introduced in the
1990s: the Broadcasting Services Act and the Radiocommunications Act were
enacted in 1992; the Telecommunications Act was enacted in 1997. Each piece
of legislation has been tailored to achieve different public policy objectives.
Our broadcasting legislation was designed to provide flexible regulation to
promote objectives such as the availability throughout Australia of a diverse
range of broadcasting services that entertain, educate and inform—a
broadcasting industry that is efficient, competitive, and responsive to audience
needs; and diversity in control of the more influential media services.
Specifically, the Explanatory Memorandum for the Broadcasting Services Act
1992 explained the rationale as follows:
it is widely accepted that television is a powerful medium with the
potential to influence public opinion, and that television has a role to
play in promoting Australia's cultural identity1.
Our telecommunications legislation, on the other hand, emphasises the long-
term interests of end users of telecommunication services and the efficiency
and international competitiveness of the Australian telecommunications
industry. And the Radiocommunications Act is designed to promote the
efficient allocation and use of spectrum to maximise public benefit.
1 Broadcasting Services Bill 1992, Explanatory Memorandum, p. 67.
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When the current regulations were being designed, there was little
understanding of a future where anyone could easily download a movie to
the home TV, view TV programs on a mobile phone, make a telephone call
via an internet service, upload personal videos for all to see, or watch content
online whenever they like. In just 20 years, Australia has moved from analog
phones to smartphones, from dial-up to broadband, and from five analog
free-to-air broadcast television channels to 15 or more digital channels, TV
and radio content delivered via internet, online video and a subscription
broadcast industry offering a vast range of television and radio channels from
a variety of providers.
These changes have implications for Australia’s communications regulations,
because the obligations imposed by the current framework often differ
depending on the type of platform the content or service is delivered on. It is
therefore timely to consider whether these differences continue to be relevant
and how we can continue to achieve public policy objectives.
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Key drivers towards convergence
The growth of the digital economy2, underpinned by rapid improvements in
network technologies, internet connection speeds (bandwidth), and devices is
a key driver towards convergence. Technological innovations are giving
consumers more choice and flexibility in how they communicate with each
other and entertain themselves.
New ways Australians can engage with media include ABC iView, Ninemsn
FIXPLAY and Yahoo!7 Plus 7. There are also services such as Fetch TV, Telstra
T-Box or TiVO, which guarantee a certain quality of service and therefore have
certain broadband requirements, meaning such services are generally not free
2 The Australia’s Digital Economy: Future Directions paper defines the digital economy as ‘the global network of economic and
social activities that are enabled by platforms such as the internet, mobile and sensor networks.’
(www.dbcde.gov.au/digital_economy/future_directions_of_the_digital_economy/australias_digital_economy_future_directions).
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of cost to the user. These so-called IPTV (internet protocol television)
broadcasters are offering more content, new features and integration with the
internet and existing TV services.
The conflation of platforms and devices is changing how Australians
communicate and engage with media. It is also challenging traditional
business models. Convergence allows new players to enter the market and
allows existing players to offer new services over new platforms. This
challenges the existing market distinctions that underlie current regulation (for
example, telecommunications services versus broadcasting services) and the
current ways in which regulation seeks to achieve policy objectives.
The trend of convergence is also occurring in a global context. The
digitisation of content and distribution platforms makes the world increasingly
flat3. There are now alternatives to shipping a movie across the seas or to
physically attending the cinema to watch it. Today, you can download a movie
to watch from the comfort of your living room or stay up-to-date with your
favourite television series even while you are travelling, thanks to an iTunes
subscription or a catch-up TV service. The tyranny of distance is largely
conquered by the easy transmission of information and media content
afforded by digital technologies.
3 Thomas Friedman, The World is Flat: A Brief History of the Twenty-first Century (2005) Farrar, Straus & Giroux.
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The establishment of the National Broadband Network (NBN) will enhance
this trend towards convergence we can already see emerging. The NBN will
offer 100 megabits per second to up to 93 per cent of Australian homes,
schools and business via fibre optic cabling. The remaining 7 per cent of
premises will be connected via a combination of next-generation high-speed
wireless and satellite technologies with broadband speeds of 12 megabits per
second or more. This will allow Australians to more quickly access content
delivered via the internet. As the recent Access Economics report Business
Expectations for the National Broadband Network (December 2010) indicated,
the time to download a 110 minute move on the NBN (100 megabits per
second) will take a mere 7 minutes and 25 seconds, compared with the 315
minutes via an ADSL connection (512 kilobits per second) or 32 minutes via
cable (8 megabits per second).
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In addition to upgrading our fixed communications infrastructure, by 2013 all
of Australia's television signals will have switched to digital-only. For viewers,
the switch to digital television offers improved picture and sound quality and
greater program choice with access to new digital channels. Through the
digital switchover program, viewers in regional and remote areas of Australia
will, for the first time, have access to the same number of free-to-air TV
channels as is available in the capital cities.
Switching off analog TV signals and the transition to digital-only, free-to-air
television broadcasting will produce a ‘digital dividend’ of 126 megahertz of
radiofrequency spectrum currently designated for broadcasting services. This
can be used to provide other communications services such as wireless
broadband, and possibly support future technological innovations.
The NBN and the release of the digital dividend will promote consumer
choice, deliver economic and social benefits, and ensure Australia is well-
placed to benefit from the global digital economy. They will also accelerate
the impact of convergence on the Australian communications market.
Effects of convergence on consumers and citizens
Australians are increasingly turning to the internet for their media and
entertainment services. Overall trends show decreases in television viewing
time, increases in online participation and increases in mobility. For example,
recent data show that Australians spent less time watching both free-to-air TV
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and pay TV in 2009 than they did in 20074. New digital channels are showing
the attractiveness of diversified product offerings, which may stall or reverse
this trend. As a recent report noted, one of the benefits of digital television
multichannels is that it allows commercial broadcasters to provide channels
that target specific audiences5.
4 Australian Media and Communications Authority, Communications Report 2009–10, pp 53–54
(www.acma.gov.au/WEB/STANDARD/pc=PC_100897).
5 Department of Broadband, Communications and the Digital Economy, Content and access: The future of program standards and
captioning requirements on digital television multichannels (December 2009)
(www.dbcde.gov.au/__data/assets/pdf_file/0018/123561/Multichanneling_Discussion_Paper.pdf).
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And of those Australians watching television, the way we are watching
television is also changing. Personal video recorders allow us to watch what
we want, when we want rather than in accordance with a broadcast schedule.
Time shifting has implications for the structure of Australian programming
Figure 1 Average time spent viewing television in FTA only and STV households, 2007 and 2009
Source: OzTAM Pty Ltd as reported in the ACMA Communications Report 2009–10
0
60
120
180
240
300
360
0–4 5–12 13–17 18–24 25–39 40–54 55–64 65+
Minutes per day
Age group
FTA TV only 2007 FTA TV only 2009 Subscription TV 2007 Subscription TV 2009
FTA TV only households
Subscription TV households
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obligations, which are based on transmissions between 6 am and midnight6.
This was recognised by OzTam, which now releases time-shifted viewing
statistics.
However, the present trend in Australians’ online engagement is upwards.
Australians are connecting to the internet in growing numbers, and the
amount of time we are spending online is increasing, as is our data
consumption.
At the end of June 2010, there were 9.6 million active internet subscribers in
Australia during the June quarter7, with the majority accessing the internet
from their homes. Seventy-seven per cent had access to the internet at home,
with sixty-six per cent of persons aged 14 years and over estimated to have a
broadband service to their home in June 2010, compared with 63 per cent at
June 20098.
6 Screen Australia, Funding Australian Content on 'Small Screens': A Draft Blueprint, 19 November 2010, p. 30.
(www.screenaustralia.gov.au/documents/SA_publications/TVFunding.pdf)
7 Australian Bureau of Statistics, 8153.0—Internet Activity, Australia, Jun 2010; Jun 2009; Jun 2008
(www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0/).
8 Australian Media and Communications Authority, 2009–10 Communications report series Report 1—Australia in the digital
economy: the shift to the online environment, p. 6 (www.acma.gov.au/webwr/_assets/main/lib310665/report-
1_aust_in_the_digital_economy.pdf).
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Figure 2 Access to the internet
Source: Roy Morgan Single Source, June 2010 as reported in the ACMA report Australia in the digital economy:
The shift to the online environment.
From June 2005 to June 2010, there was a 100 per cent increase in the
number of Australians considered 'heavy users' of the internet. The highest
proportional increase in heavy internet users occurred amongst older
Australians (as a result of the comparatively smaller online base for this
segment of the population), but there were also substantial increases across
88
76
63
41
17
89
77
66
40
15
0
10
20
30
40
50
60
70
80
90
100
Ever accessed the
internet
Internet
connection at
home
Broadband
connection at
home
Internet at work Internet elsewhere
% of internet users 14 years and over
Jun‐09 Jun‐10
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all age groups from 14 year olds to persons over 65 years of age, from 63 per
cent to 122 per cent9.
Once online, our data consumption is increasing. In June 2010, Australians
downloaded 155 503 terabytes of information10. (It may help to imagine that
one terabyte is roughly equivalent to 200 DVD-quality movies.) This is a
significant increase compared with the 55 434 terabytes downloaded in the
2008 June quarter, close to tripling. The majority of data is downloaded via
fixed-line broadband services (91 per cent of data downloads).
Figure 3 Volume of data downloaded by Australian internet users
Source: ABS, 8153.0‐Internet Activity, Australia, June 2010 as reported in the ACMA Communications Report 2009–10.
9 Id., p. 13.
10 Australian Bureau of Statistics, 8153.0—Internet Activity, Australia, Jun 2010; Jun 2009; Jun 2008
(www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0/).
81 352
99 249
294Dial‐up
280Dial‐up
14 251Wireless
13 330Wireless
113 410Fixed line
141 892Fixed line
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
Dec‐08 Jun‐09 Dec‐09 Jun‐10
Terabytes
Quarter ending
127 954
155 503
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The top 10 websites that Australians visited show a strong preference for
social networking and user-generated sites. Our engagement with these sites
is roughly comparable with internet users in the United Kingdom and the
United States of America, which demonstrates the increasingly global nature
of digital communication. The growth in popularity of global sites such as
YouTube—the third most-visited site in Australia—has implications for
Australian content11.
Table 1 Top websites accessed in Australia, the UK and USA during June 2010
Most visited websites Australia (%) UK (%) USA (%)
Google search 86 84 72
Facebook 61 66 47
YouTube homepage 43 — —
Google maps 40 46 37
Wikipedia 38 39 —
eBay 36 46 —
Google image search 32 33 26
ninemsn homepage 30 — —
Windows Live hotmail 30 38 19
Blogger 21 21 —
Note: Relates to users of a home broadband service.
Source: Nielsen Online, June 2010 as reported in ACMA report Australia in the digital economy: The shift to
the online environment
11 Screen Australia, Funding Australian Content on 'Small Screens': A Draft Blueprint, 19 November 2010, p. 31.
(www.screenaustralia.gov.au/documents/SA_publications/TVFunding.pdf)
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This online preference for global sites serves as an interesting comparison to
the preferences of free-to-air television viewers. Australian titles have
traditionally dominated the ratings and the trend has been getting stronger in
recent years. The top 20 programs on free-to-air television since 2007 are all
Australian12. This demonstrates the importance that many Australians place on
Australian and local content.
According to a July 2010 report by the Nielsen company13, Australia has the
highest global average for time spent using social media (over seven hours
per month). Aside from their social aspect and use to share information, these
tools offer new ways to engage with and complement traditional media
services. In the United States, blogs and social web sites such as Facebook
and Twitter have been described as enabling an ‘online water cooler
conversation’ around television viewing14. People watch television and engage
online at the same time, to discuss what they are watching with friends and
family. This is incorporated into television programs in some instances. For
example, some television programs have added an interactive dimension by
allowing viewers to send comments for a host to read out. The ABC’s Q&A
12 Id., p. 48.
13 NielsonWire, Social Media Dominates Asia Pacific Internet Usage 9 July 2010 (http://blog.nielsen.com/nielsenwire/global/social-
media-dominates-asia-pacific-internet-usage/).
14 Brian Stetler, 'Water-Cooler Effect: Internet Can Be TV's Friend', The New York Times, 23 February 2010
(www.nytimes.com/2010/02/24/business/media/24cooler.html?_r=2).
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program displays viewers’ Twitter comments almost immediately at the
bottom of the screen as the debate continues uninterrupted15.
Source: Australian Broadcasting Corporation
In Australia, there is further evidence of the interrelationship between online
engagement and TV viewing. The highly successful television program
MasterChef was popular online as well. The program attracted 233 000 fans
on Facebook and became a global trending topic on Twitter. The program
also saw video views on the official MasterChef website increase by 44 per
cent in 2010 to 13.1 million compared with 2009 and page views for the
season reached 48 million, an increase of 32 per cent compared with 200916.
Finally, there is a high proportion of mobile voice services in Australia—22.5
million (compared with 22.2 million in June 2009). Of these, 30 per cent
15 ABC Television, Q&A (www.abc.net.au/tv/qanda/txt/s2882539.htm)
16 Lara Sinclair, 'MasterChef a hit dish online as well as TV-ratings winner', The Australian, 2 August 2010
(www.theaustralian.com.au/business/media/masterchef-a-hit-dish-online-as-well-as-a-tv-ratings-winner/story-e6frg996-
1225899734482)
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allowed internet connectivity17. The greatest growth in overall mobile services
in Australia came from mobile wireless broadband services, where customers
accessed a broadband service via a datacard or dongle connected to a
desktop or portable computer. The number of mobile wireless broadband
subscribers increased from two million in June 2009 to 3.5 million in June
201018.
The increased capacity of mobile networks, including through the rollout of
3G services, and the increased functionality of mobile devices has led to a
diversification in the range of non-voice activities conducted via mobile
handsets.
17 Australian Media and Communications Authority, Communications Report 2009–10, p. 27
(www.acma.gov.au/WEB/STANDARD/pc=PC_312368) ; Id., p. 32
18 Australian Bureau of Statistics, 8153.0—Internet Activity, Australia, Jun 2010; Jun 2009; Jun 2008 (available at:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0/).
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Figure 4 Non-voice activities undertaken via mobile telephones, June 2010
Source: Roy Morgan Single Source, June 2010 as reported in the ACMA Communications report 2009–10.
2
2
2
35
8
9
10
12
18
20
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24
46
82
84
0 10 20 30 40 50 60 70 80 90
Video messaging
Infra-red functions
Global roaming
Made video callsGPS (global positional system) functions
Listening to the radio
Using as a personal organiser or PDA
Entered a competition or voted using SMS
Taking videos
Playing music/MP3s
Picture messaging/MMS
Playing games
Bluetooth functions
Taking photos
Sent SMS
Received SMS
% of main mobile phone users 14 years and over
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Impact of convergence on business
The growth in the number of devices and platforms by which consumers can
communicate and engage with media has changed revenue models for
traditional media businesses, and caused the development of new and
changed business models.
There are three main changes discernible in the communications industry as a
result of convergence. These are the rise of a new platform—online—to
compete for advertising dollars; the fragmentation of the market across more
platforms and competitors; and, the (presently) lower level of online revenues.
The growth in new distribution channels, including online, and the changing
media consumption habits, are altering advertising expenditure. Some of the
changes in advertising expenditure are assumed to result from the global
financial crisis. However, even allowing for these weakened economic
conditions, the pattern of advertising expenditure seems to have changed as
a result of convergence.
In the 2009 calendar year, television advertising expenditure remained stable
at 28 per cent of total expenditure19.
Total expenditure on online advertising in
Australia increased by 12 per cent to reach $1.9 billion by the end of 2009.
19 Australian Media and Communications Authority, Communications Report 2009–10, p. 50
(www.acma.gov.au/WEB/STANDARD/pc=PC_312368 ).
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Overall, online advertising also increased its share of total media advertising
expenditure from 13 per cent in 2008 to 15 per cent in 200920.
In the five years to 2008–2009, the revenues for free-to-air broadcasters have
fluctuated, most likely due to global financial conditions as well as the
increased competition for advertising revenue. However, program expenditure
has remained steady. In particular, expenditure on Australian drama as a
proportion of total revenue has risen over the last five years from 3 per cent
in 2006–07 to 5 per cent in 2008–0921.
Added to this tension between fluctuating revenues and rising programming
expenditures is the fact that the convergence trend is leading to competition
for consumers’ attention in other revenue models for content. Disney CEO
Robert Igner has noted on several market updates22 that the decline in DVD
sales over recent years seems to be less as a result of cyclical conditions
related to the weaker economy, but actually reflective of fragmentation of the
consumer market, as more and more products and services compete for
consumers’ entertainment time.
20 Id., p. 50.
21 Screen Australia, Funding Australian Content on 'Small Screens': A Draft Blueprint, 19 November 2010, p. 31.
(www.screenaustralia.gov.au/documents/SA_publications/TVFunding.pdf)
22 R. Scott Raynovich, 'Disney Dinged by Flight from DVDs, Economy', Contentinople, 4 February 2010; Ryan Lawler, 'Disney's Iger:
DVD Sales Drop is Sobering', 12 November 2010 (http://gigaom.com/video/disneys-iger-dvd-sales-drop-is-sobering/).
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One industry that has grown to compete for consumer attention is the
gaming industry. The interactive games sector in Australia is estimated to
have increased by 41 per cent in 200823.
Another trend affecting business models is the trend towards the ‘granular’
nature of media consumption. For example, consumers can now download
songs, not albums; watch specific TV shows on demand and not the linear
programming of a channel, and read a single news article through an online
search engine, rather than purchase and read the day’s newspaper edition. In
the online world the consumer is in the driving seat of their own media and
entertainment consumption patterns with more choice and control than ever
before.
In addition to the rise of competing online platforms and fragmentation of
the consumer market, another challenge to established business models is
that digital revenues are not yet matching analog ones. In 2008, NBC
Universal CEO Jeff Zucker famously stated that media companies should not
‘trade analog dollars for digital pennies’24. By 2009, he quipped that this may
have increased to ‘digital dimes’25. While online revenues are growing and the
23 PriceWaterhouseCoopers, Media and Entertainment Outlook 2009–2013 (August 2009).
24 Liz Gannes, NBC Jeff Zucker Dishes on Hulu, Strike, iTunes, Kitchen Sink, GigaOm, 27 February 2008
(http://gigaom.com/video/nbc-jeff-zucker-dishes-on-strike-hulu-itunes-kitchen-sink/).
25 Chris Albrecht, Zucker: ‘We’re at Digital Dimes Now’, GigaOm, 18 March 2009 (http://gigaom.com/video/zucker-were-at-digital-
dimes-now/).
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gap is reportedly closing26, ensuring ongoing investment while balancing the
difference between analog dollars and digital cents presents challenges to
established media companies.
Effects of convergence on regulations and references to the Terms of
Reference
These online trends are significantly challenging the existing media regulatory
regime, which was built around an environment that emphasised linear
programming to a singular concept of ‘audience’, a reliance on terrestrial
licensing and associated spectrum allocations, and the use of traditional
broadcasting business models and methods for content delivery.
There is widespread agreement—both in Australia and internationally—that
regulatory settings need reassessment in light of convergence trends. The
OECD indicated as far back as 2007 that ‘legacy policy frameworks should not
hamper convergence, investment and choice in the marketplace.’27 The
International Telecommunications Union acknowledges that asymmetries in
the burdens or opportunities created by regulation creates the potential for
competitive advantages for certain firms28.
In light of the technological innovations, changed media consumption
patterns and business model challenges outlined above, the government has
26 Jo Mullin, Digital Home: The Content Conundrum—How Does It All Get Paid For?, Paidcontent.org, 8 November 2010
(http://paidcontent.org/article/419-digitalhome-the-content-conundrum-how-does-it-all-get-paid-for/).
27 OECD Policy Guidance for Convergence and Next Generation Networks DSTI/ICCP/CISP(2007)11/FINAL 7 April 2008
(www.oecd.org/dataoecd/14/52/40869934.pdf).
28 Fixed–Mobile Convergence Discussion Paper, ITU Global Symposium for Regulators, 2007
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directed the Review Committee to examine the current broadcasting and
media policy framework and ask whether the existing regulatory objectives
remain appropriate.
Areas of focus for the review, as outlined in the Terms of Reference, include
the following.
Policy settings that encourage Australian, local, and children’s content
Under the current regulatory framework, Australian content quotas (including
children’s content) and local content quotas apply to commercial television
and radio. These broadcast quotas ensure the production and broadcast of
Australian content and complement other government initiatives that support
the supply of Australian content. Subscription television services are subject to
a different scheme that requires them to spend 10 per cent of their drama
expenditure on Australian content. Services delivered over the internet or
mobile networks have no content requirements at all.
The rise of these alternative audiovisual services and the growing
fragmentation of the media market raises questions as to the best way to
ensure the ongoing production and distribution of local and Australian
content that reflects and contributes to the development of national and
cultural identity.
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Policy settings and spectrum allocation
Radiofrequency spectrum is required to carry information/communications
(such as television and radio) over wireless networks. It is a valuable public
resource and the broadcast planning system is based on allocating spectrum
efficiently and ensuring that Australians have access to a diversity of radio
and television services suitable to their region.
A core part of the planning process is the issuing of licences by geographical
region or licence area. A range of government policies, such as media control
and diversity are linked to broadcast licence areas. This framework is already
under pressure from satellite broadcasting, and is coming under more
pressure from services available globally over the internet. Broadcasting
spectrum is a finite resource that is potentially very valuable. A further
consideration for the review is how a public return for the use of this resource
is levied on spectrum users, including the quantum and nature of the return.
The Terms of Reference direct the Committee to consider appropriate ways
to treat content, and the services and applications used to deliver content,
which are cross-border in nature and the appropriate processes by which
to manage spectrum allocation.
Policy settings that reflect community standards
There is some variation in how classification categories are applied on
different platforms—for example, subtly different classification schemes are
used by the free-to-air broadcast sector and the film distribution and cinema
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sectors. Convergence significantly challenges these distinctions because the
same story might be told over multiple platforms, but fall subject to variations
in classification ratings and the way in which these ratings are applied. There
are also variations in the requirements for different platforms around
advertising standards—for example, community concern over offensive or
insensitive advertisements and community standards on news reporting and
the broadcast of emergency information. The government intends that the
review considers appropriate policy settings to ensure the adequate
reflection of community standards and the views and expectations of the
Australian public
Policy settings for maximum consumer choice
The allocation and regulation of broadcasting licences based on geographic
areas is under pressure from the increasing delivery of television like content
over the internet. An example of this is the audience reach rule in Section 53
of the Broadcasting Services Act which prevents commercial broadcasters
from controlling licences reaching more than 75 per cent of the population.
This rule is increasingly under challenge as major commercial networks now
offer internet television services, available to all Australians with an internet
connection.
Amendments to the Broadcasting Services Act in 2006 were designed to
encourage investment in new markets by removing some restrictions on
control and ownership. Despite these recent changes, the existing media
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diversity rules still only apply to three markets—radio, TV and newspapers.
Importantly, they do not reflect the diversity represented by other content
services including subscription television, new managed IPTV services and the
range of internet services such as download services, catch-up TV, and social
media. In light of these limitations the government has directed the review to
take into account the appropriate policy settings to maximise transparency,
choice and access for consumers to the broadest range of content across
platforms, and services used to deliver content.
Related issues
The topic of convergence touches on a broad range of issues. To ensure the
Convergence Review is effective, it will not be possible to consider every issue
associated with the key trends outlined above. Many of the issues that are not
covered in the Terms of Reference are subject to consideration by separate
policy review discussions. Where these issues intersect with convergence
issues, the Review Committee has scope to consult appropriately and, where
necessary, to accept or send referrals to other reviews.
In particular, there are a number of telecommunications-related issues that
are not viewed as appropriate for consideration at this time as they are
dependent upon ongoing discussions around the NBN, or are under
consideration as part of the establishment of USO Co, a government entity
that will, among other things, assume some responsibilities under the
Universal Service Obligation. More generally, the government has embarked
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upon a comprehensive reform agenda of the telecommunications regulatory
regime, to address long-standing concerns with the way in which the regime
operated, and to appropriately pave the way for the rollout of the wholesale-
only access NBN.
Next steps
This paper provides context to some of the issues that the Convergence
Review will cover. Over the course of the review, the department will release
discussion papers that focus on particular policy areas. The Review Committee
will also undertake a comprehensive consultation process and will accept
submissions from interested parties.
For information about the discussion papers, the consultation schedule and
process and about making submissions, please visit the convergence review
website at dbcde.gov.au/convergence. Please send specific questions by email
to convergence@dbcde.gov.au or by post to:
Convergence Review Secretariat
Department of Broadband, Communications and the Digital Economy
GPO Box 2154
CANBERRA ACT 2601
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